Indirect method
Building the cash flow statement from net profit: non-cash charges are added back and the movement in working capital is adjusted for.
How to read the number
Read top to bottom, it shows exactly how profit differs from cash — item by item.
When the metric lies
The method does not reveal how much cash came in from customers and how much went out to suppliers: it explains the difference without disclosing the flows.
Also known as: indirect cash flow statement